Question 1

When the Federal Reserve Board (the Fed)buys securities,it decreases the money in circulation.

Accepted Answer

A) True 
 B)False

Question 2

_____ are similar to interest-bearing checking accounts,but with more restrictions.

Accepted Answer

A)  Current accounts
B)  Checking accounts
C)  Money market accounts
D)  Savings account
E)  Negotiable Order of Withdrawal accounts

Question 3

A movement of funds by means of a _____ is most likely to be referred to as electronic funds transfer.

Accepted Answer

A)  credit card
B)  mutual fund
C)  debit card
D)  checking account
E)  telephone

Question 4

Coins are used primarily to provide:

Accepted Answer

A)  acceptability.
B)  inimitability.
C)  divisibility.
D)  stability.
E)  portability.

Question 5

If a person invests in a firm that pools funds from a large number of people and buys and professionally manages stock from a number of diversified companies,that person is investing in a(n) :

Accepted Answer

A)  certificate of deposit.
B)  individual retirement account.
C)  mutual fund.
D)  banker's acceptance.
E)  time deposit.

Question 6

Which of the following actions did the Federal Reserve take during the most recent financial crisis between 2000 and 2008?

Accepted Answer

A)  It gave a directive to change the management of the banks that had to be bailed out.
B)  It compensated all investors who lost money in the crisis.
C)  It relaxed some of the regulations that had previously bound the financial industry.
D)  It kept the interest rates low to stimulate the economy.
E)  It issued a directive to keep all information regarding derivative products confidential.

Question 7

Stan's sister tells Stan that the number of toffees she could buy for a dollar when she was his age was greater.Stan's sister is referring to the _____ of money.

Accepted Answer

A)  acceptability
B)  inimitability
C)  divisibility
D)  stability
E)  portability

Question 8

Which of the following actions is the Federal Reserve Board most likely to take in an attempt to increase the money supply in the economy?

Accepted Answer

A)  Raise reserve requirements
B)  Buy government securities
C)  Print more money
D)  Raise discount rates
E)  Restrict credit controls

Question 9

A debit card:

Accepted Answer

A)  provides a hard "paper trail."
B)  allows cardholders to pay for transactions at a later date.
C)  offers a purchase "grace period."
D)  looks like a credit card but works like a check.
E)  has credit features.

Question 10

Which of the following institutions is similar to a savings and loan association but is owned by its depositors?

Accepted Answer

A)  Commercial bank
B)  Thrift institution
C)  Mutual savings bank
D)  Federal bank
E)  Investment bank

Question 11

The life expectancy of a $20 bill is estimated to be 7.7 years.Which of the following characteristics of money does this statement illustrate?

Accepted Answer

A)  Divisibility
B)  Durability
C)  Acceptability
D)  Stability
E)  Portability

Question 12

The _____ prohibited commercial banks from being in the insurance and investment banking business.

Accepted Answer

A)  Celler-Kefauver Act
B)  Sarbanes-Oxley Act
C)  Gramm-Leach-Bliley Act
D)  Glass-Steagall Act
E)  Dodd-Frank Act

Question 13

_____ are businesses that protect their clients against financial losses from certain specified risks in exchange for a fee,called a premium.

Accepted Answer

A)  Insurance companies
B)  Investment banks
C)  Finance companies
D)  Mutual savings banks
E)  Commercial banks

Question 14

Nonbanking institutions differ from banking institutions in that they:

Accepted Answer

A)  offer long-term loans.
B)  offer investment products.
C)  include credit unions.
D)  do not accept deposits.
E)  do not offer short-term loans.

Question 15

In some countries with very high inflation rates,citizens tend to spend their money as fast as they receive it in order to keep it from losing any more of its value.Under these conditions,money is said to lack:

Accepted Answer

A)  portability.
B)  divisibility.
C)  durability.
D)  stability.
E)  inimitability.

Question 16

Employees of a local school conduct their financial transactions through a financial institution,which is also owned by them.This financial institution is most likely to be a(n) :

Accepted Answer

A)  commercial bank.
B)  credit union.
C)  savings and loan association.
D)  insurance company.
E)  federal bank.

Question 17

Which of the following characteristics of money refers to the ability of a dollar bill to be handled a hundred times without significant wear and tear?

Accepted Answer

A)  Portability
B)  Divisibility
C)  Durability
D)  Stability
E)  Exchangeability

Question 18

To be effective,money must be readily received for the purchase of goods and services and for the settlement of debts.Which of the following characteristics of money does this statement reflect?

Accepted Answer

A)  Divisibility
B)  Durability
C)  Acceptability
D)  Stability
E)  Portability

Question 19

A money market account differs from an interest-bearing checking account in that the owners of a money market account:

Accepted Answer

A)  can write only a limited number of checks each month.
B)  can take out their funds whenever they want in specific denominations.
C)  can withdraw funds only at the time of their retirement.
D)  cannot convert the funds into cash.
E)  cannot withdraw the funds without an advance notice of six months.

Question 20

Which of the following characteristics of money allows people to postpone purchases and save their money to do so?

Accepted Answer

A)  Divisibility
B)  Imitability
C)  Acceptability
D)  Stability
E)  Portability

Exam 15: Money and the Financial System

To be effective,money must be readily received for the purchase of goods and services and for the settlement of debts.Which of the following characteristics of money does this statement reflect?

Correct AnswerverifiedShow Answer

Employees of a local school conduct their financial transactions through a financial institution,which is also owned by them.This financial institution is most likely to be a(n) :

Correct AnswerverifiedShow Answer

The _____ prohibited commercial banks from being in the insurance and investment banking business.

Correct AnswerverifiedShow Answer

_____ are similar to interest-bearing checking accounts,but with more restrictions.

Correct AnswerverifiedShow Answer

Which of the following characteristics of money refers to the ability of a dollar bill to be handled a hundred times without significant wear and tear?

Correct AnswerverifiedShow Answer

Stan's sister tells Stan that the number of toffees she could buy for a dollar when she was his age was greater.Stan's sister is referring to the _____ of money.

Correct AnswerverifiedShow Answer

Which of the following actions did the Federal Reserve take during the most recent financial crisis between 2000 and 2008?

Correct AnswerverifiedShow Answer

Coins are used primarily to provide:

Correct AnswerverifiedShow Answer

Which of the following institutions is similar to a savings and loan association but is owned by its depositors?

Correct AnswerverifiedShow Answer

If a person invests in a firm that pools funds from a large number of people and buys and professionally manages stock from a number of diversified companies,that person is investing in a(n) :

Correct AnswerverifiedShow Answer

In some countries with very high inflation rates,citizens tend to spend their money as fast as they receive it in order to keep it from losing any more of its value.Under these conditions,money is said to lack:

Correct AnswerverifiedShow Answer

Which of the following characteristics of money allows people to postpone purchases and save their money to do so?

Correct AnswerverifiedShow Answer

When the Federal Reserve Board (the Fed)buys securities,it decreases the money in circulation.

Correct AnswerverifiedShow Answer

_____ are businesses that protect their clients against financial losses from certain specified risks in exchange for a fee,called a premium.

Correct AnswerverifiedShow Answer

A money market account differs from an interest-bearing checking account in that the owners of a money market account:

Correct AnswerverifiedShow Answer

Which of the following actions is the Federal Reserve Board most likely to take in an attempt to increase the money supply in the economy?

Correct AnswerverifiedShow Answer

The life expectancy of a $20 bill is estimated to be 7.7 years.Which of the following characteristics of money does this statement illustrate?

Correct AnswerverifiedShow Answer

A movement of funds by means of a _____ is most likely to be referred to as electronic funds transfer.

Correct AnswerverifiedShow Answer

A debit card:

Correct AnswerverifiedShow Answer

Nonbanking institutions differ from banking institutions in that they:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified